iTablet supply chain rumors

Here's the latest chatter about the supply chain of the coming Apple gadget — if it really exists.

Global Post, January 26, 2010

TAIPEI, Taiwan — Here comes, maybe, Apple's "iTablet." Or "iSlate." Or "iWhatever."

Apple's so-called "Jesus Tablet" has been described as the ultimate gadget: A netbook, e-book reader, movie player and games platform all in one. It's going to revolutionize publishing, and education. No mention yet on solving Middle East peace, but surely it's only a matter of time.

Now, Apple fans are in a frenzy over a press event Wednesday at which the tablet may finally — maybe — be revealed to all. And yes, all the jokes about Moses bringing the tablet down from the mountain have already been made.

GlobalPost doesn't have any solid information to add since our last dispatch on this topic, nearly a year ago. But here in Asia, where many of Apple's mos popular products are manufactured, there's been plenty of unconfirmed hearsay.

Apple doesn't comment on its suppliers, as a rule. Calls to reported suppliers for the wonder gadget got the usual litany of "no comments" and a few chuckles that we even asked.

"Apple's a very special customer, so their information control is very, very strict," said one spokesperson, who didn't even want to be named saying,"If we address any question it could be very embarrassing."

"It's highly confidential," said another spokesperson, before rushing to add, "If we really have this plan."

Why the Manhattan Project-like secrecy? Here's how tech consultant Tracy Tsai of Gartner explains it: "Apple treats confidentiality as so important, so any release of information could jeopardize business relations between suppliers and Apple."

Still, there are plenty of rumors about the supply chain from industry analysts, several of whom also did not want to be named.

If the tablet's for real, Taiwanese companies will be key contractors, as with other Apple products like the iPhone. Herewith, a roundup of the chatter.

ASSEMBLY

One of the single biggest winners from Apple's tablet hype could be Hon Hai, also known by its trade name Foxconn. Headed by celebrity billionaire Terry Gou, it's the world's largest electronics contractor and a longtime Apple partner.

Analysts say Hon Hai will likely be tapped for most of the final assembly of the tablet. Such assembly is typically done at its factories in China. Hon Hai declined comment.

It's possible that other Taiwan contractors Inventec or Quanta could get some assembly orders too — Apple likes to diversify and play off suppliers against each other to get the cheapest prices, say analysts.

TOUCH SCREENS

This is the key component, according to analysts, and one of the most expensive. Apple's tablet is rumored to feature a 10-inch touch screen that's a larger version of what's used in the iPhone or iPod Touch.

"Apple has developed this product for at least a year and a half," said one industry analyst. "The bottleneck is the touch panel sensor. It's very difficult to make, so the project has been postponed."

Rumored suppliers for tablet screens included TPK, possibly working together with Sintek, as well as Wintek (the firm at the center of Global Post's Silicon Sweatshops series and Hon Hai flat-screen subsidiary Innolux.

"From Apple's perspective, whoever can deliver good yields (the percentage of screens produced that pass all tests and function well) and better costs will be used as the main source," the analyst said.

Analysts say Apple's original touchscreen partner was TPK, a Taiwan-based firm that manufactures in Xiamen, China. It's a privately-held firm with investment from Germany's Balda AG, which reportedly reduced its holdings to less than 20 percent last November, and other investment from a group of "Asian institutional investors," according to this press release.

TPK declined comment on the tablet and would not confirm that Apple was a customer. But it did say it is planning an initial public offering on the Taiwan Stock Exchange in mid-to-late March.

One analyst said TPK was almost the sole supplier of touch screens for the first-generation iPhone, with some screens also made by Japan's Sharp. Wintek made screens for the second-generation iPhone, after its experience working with Apple on the iPod Touch, the analyst said.

"For today's iPhone and iPod Touch, TPK likely supports 60 percent, and Wintek 30 percent, and Apple has other smaller suppliers," the analyst said, making them logical suppliers for similar iTablet screens. "For sure, Wintek's one of the suppliers for the tablet," said another analyst.

Wintek spokesman Jay Huang declined comment on the tablet rumors, but said, "Apple is one of our customers. We have had a close relationship with them over the past two to three years."

Now, Innolux and Sintek may be in the mix too — for iPhone screens, iTablet screens, or both. "Innolux sent sample products to ship to Apple," in the second half of last year, "but the volume was very very small," the first analyst said.

Innolux is a rising star in flat-panels; it recently inked a deal to acquire two other liquid crystal display panel makers. When completed, that merger will make Innolux Taiwan's largest panel-maker, with the scale to better go head-to-head with South Korean giants Samsung and LG Display. Innolux declined comment for this story.

The more obscure Sintek may be working with TPK to provide an integrated supply solution for touch panels, the analyst said.

"Sintek would make the touch sensor, give it to TPK for the assembly of the touch panel with lens and display, and then give it to Foxconn for final assembly," the analyst said. Sintek did not immediately respond to a request for comment.

The firm Cando was also mentioned by one analyst as a possible screen supplier. Cando did not immediately respond to a request for comment.

Jeff Pu, a handset analyst at Fubon Securities, said touch-screen manufacturers with newer-generation factories would increasingly have an edge.

"Higher generation factories means you produce on bigger substrates," said Pu. "The larger the glass substrate, the more output. More output means lower costs. So the trend in future will probably be a shift to later generation fabs like [those of] Sintek, Innolux and Hannstar."

OTHER COMPONENTS:

Battery: Dynapack is the rumored supplier. Phone calls to the firm went unanswered.

Frequency stabilizer: TXC, which was not immediately available for comment.

Mini coaxial cables: reportedly supplied mostly by Wanshih Electronic. Wanshih declined comment.

Power supply "chokes": this part, which stabilizes power flow in gadgets so they don't get fried or under-juiced, will reportedly be supplied by Maglayers. The firm said that Apple was a customer, but declined comment on the tablet.

Printed circuit boards: Unimicron, Gold Circuit Electronics and Tripod Technology are potential suppliers.

Thermal module: Sunon.

Screen connectors: reportedly supplied by Cheng Uei Precision Industry Co, which sells products under the "Foxlink" logo. Said a spokesman: "Apple is our customer, but they've asked us not to respond," to questions about specific products. Asked about Wednesday's Apple event, the spokesman said: "We look forward to it, too."

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